218:;
F:EJ)ERAL REPORTER.
of the ultimate amount of the increased stock, the plaintiff in error paid for his shares, and ,his certificate" Tbis did r in legal contemplation, with knowledge of the law, which authorized tile association and the comptroller of the c.urrency to red\lce theamollnt of the proposed increase to a less sum than that fixed in the original proposal of the directors; and such payment, and acceptance of in accordance therewith, might amount, ()n ',bis,part, to a ver of the right t() that under '.Iuch he should ,be bound linless the whole alll,ount of the proposf>d Increase ", ' , ' . should be subscribed for and paid in." In'the presentcase, I am of opinion that the acceptance,of his'certificate by the defendant, and the retention ()f, the same during the period of reorganization, and until after the bank finally passed inro the hands of a receiver in May, 1881, several months after all the facts were within his to II ratification on his part of the act of the comptroller 'ofthe-eurrency as to,theinqrease of stock, and that hecaDD()tnow come'fdrwardand assert that, as to him, the in- , Inthe case of Eawn v. Bank, 144 Mass. crease as finally made is 260, 10 N. E. Rep. 844, the facts were different,for in that case the plaintiff refused to accept her certificate of stock, and demanded b.ack her money. be entered for the plaintiff, and it is so ordered. Judgment for, plaintiff.
BLAm ' 'lJ. SHAEFFER
and. others. W. D. 1887.) I;
""'(Otrc'Uit OOU'I't,
w: Do Mi8aouri,
J" 1.PARTNllIRSUtp..,-W'JlATCONSTITUTES-CON,TRACT.
2.:
tiff was to1urnisli the money, and the 'defendant was to obtain'the title to the property in· hiB own name,and manage ·it for a fixed of 5 per cent. on .sal!lS, for their mutual benefit.. , In rega:r<l the profits the contract furth.ex:provided that when had be.nsold to repay the plaintiff 'all, the money he had advanced, With interest, thefi ,the remainder of the property.should belong, 60 per cent., to the plltintiff, and 40 per cent. to thll defend8,nt, or if the remain4er of tqe property was converted into money, then, t4eproceeds should belong; 60 per cent. 'to the plaintiff. and 40 per cent. to the defendant. Held, that the contract did not create a partnership betwe6nthe,parties. 1 ,', ' A cQntract between the plaintiff ang his ageht. the defendant. provided that within four months after said agent shall have obtained the title to said lands, Or sooner if desired by, the plaintiff, saidl)gent sp.all make a warranty deed to said plaintifffo;ljsaid lands. The agent claimed that he had not secured a perfect title, and refused to convey:. T4eplaintiff was willing to take the title tb:e agent had. Held, that it dId not lie in the agellrs mouth to allege a defect'iil the , t i t l e . , : : . ' TO CONVEy-UEll'ECTIVE,TITLE. '., '. .'
1884;, the parties entered into a contract whereby the
"
'
.8LA'lR':V. SHAEFFER. a.PRINCIPAL AND
'219
By it appeared tbat the defendant. wbo was the agent of the Plailjltifl:t.p 1;)uy c.ert.a.in pro.pe.rtyfor t4e'plllo.intiff Chilo.rged.an.d received . ..· .. . . from. the plaintiff '21,83.6.70 more than he paid for the property. Held, that it was a: 'Clearcaseof gross misconduct; and that defendant bad' forfeited all .interest and rights jotiven him. by his contract with plaintiff.
OF AGENT-FoRFEITURE OF RIGHTS.
O. 'O.,'.l!icheJrurr,Johnson &: Lucas, and W. 11. WaUaae, for cOJ;nplainant. Karnes&: Krauthoff andlV. W. Beebe, for defenliant. BREWER, J. This bill was filed to compel the execution of a. deed, and fot decree adjudging ·that defendant has no interest in the land, and enjoiniJ:)g from interfering therein. The are these: On Febrl1ary4, 1884'; the parties, complainant and defendant, entered into this 'contract:
a.·
"Whereas" by virtue of a certain contract made by Samuel C. Shaeffer, of Lancaster, Ohio, with P. Cardenas, of New York city, for the purchase of ,tMrty-six47.100' (3647-100) acres of land in Jackson county, Missouri, ,and known as lot 'l, of the partition of the estate of Thomas West. deoeased, by the circuit court of Jacksoll'county, Missouri, on October, 18, 1880. as per contract dated the first day of November, 1883, for which said land the said Shaeffer was to pay the said Cardenas the sum of twenty-one thousand eight < hundred' and eig-llty-two ($21;882) dollars, on or before thp. eighth day of February, 1884. Now it is agreed, as said contract is made by said Shaeffer for said land, and for prudential purposes, that the Same shall be cOllveyedby warranty deed to said Shaeffer, and that John I. Blair, of Blairstown, ,N. J., has paid for the same by giving to said Shaeffer a check 011 the National Park Bank of New York, City, for the sum of twenty-one thousand eight ,hundred and eighty-two ($21,882) dollars, signed by the president of the Belvidere National Bank of NewJ6I;sey, to enable him to pay for the said land. "And whereas, by another agreement made by said Shaeffer with Marian West, of JacksQn county, Missouri, dated July 24.1882, and October 21, 1882, whereby said Marian West sold the interests of Frank West, Thomas West, and JosephC. West, minor heirs of Thomas West, deceased. and known as lots five, (5,) six, (6.) and eight (8) of the partition of the estate of Thomas West, deceased, by the cirCUit court of Jackson county, Missouri, on October 18, 1880, for which said land, by said contract, said Shaeffer was to pay the sum of forty·four thousand five hundred and fifty-nine (44,559) dollars. ten thousand to be paid in cash upon the delivery of the deed, and the remainder. ($34.559,) to-wit, ($17,27950-100.) on or before the eighth dayof February, 1885. and. ($17,279 50-100) on or before the first day of February. 1886, bearing 8 per cent. interest from February 1, 1883, and secured by a mortgage on said premises: the said John I. Blair has given to said Shaeffer a check, signed by the president of the Belvidere National Bank of New Jersey on the National Park Bank of New York City, for,ten thousand (10,000) dollars, to enable said Shaeffer to pay that much on account of said lands, and , for prUdential reasons to obtain a deed for the same in his own name. The . said Blair is to pa.y the ba.lance of the purchase money at maturity, amount.iug to '$34, 559, given by said Shaeffer, and secured by mortgage. This makes at this time the cash payments on the above two contracts, ($21,882 and $10,OOO.,making $31,882,) which is to bear eight per cent. interest until paid out . of the salea,bf the lands as aforesaid. The interest to be added to the principal yl:larly, and bear eight per cent. interest until paid. Within four months after said Shaeffer shall have obtained the title to said lands, or 'sooner if desired by said Blair. said Shaeffer to .make a warranty deed to said Blair for
220
FEDERAL REPORTER.
said lands. Now, it is further agreed, fOr the mutual interest of said Blair and Sbaeffer, it may be deemed advisable to obtain certain relea8es for pretended claims made by the Anthony heirs to said property, the sum for said purpose to be mutually agreed upon, .which sum said Blair to furnish to said Shaeffer upon telegraph notice, to aid him in securing said releases, and Shaeffer afterwards to deed by release deed said lands to said Blair, said money to bear the same rate. of interest and governed by the same conditions, as helinbefore stipulated, the be indorsed on this contract or other written evidence given that said BlaIr paid the money· ..It is deemed for the mutual benefit of said Blair and Shaeffer that Shaeffer purchase the 69 acres of land from Johl1 S. West adjoining the above-described lands,at a price not to exceed $400 per acre, amounting to twenty-seven thousand six hundred ($27.690) dollars, aup. to obtain a warranty deed therefor. "Said John I. Blair has given said Shaeffer the president's check of the Belvidere National Bank of New Jersey, on the National Park Bank of New York City, for fourteen thousand aud six hundred dollars, ($14,600,) as part payment' for said sixty-nine acres of .land. If said property cannot be purchased for twenty-seven thousand six hundred ($27,600) dollars, then said ($14,600) checkto be returned to said Blair unused. Said Blah' agrees to assumE! and pay ($13,000) mortgages on said property, which said Shaeffer will give to said West, payable in one or two years, and bearing eight per cent. interest, in case said purchase can be made. Said Shaeffer, within four months after obtaining title to said land, to deed same to said Blair, all the money paid 01' furnished, and assumed to pay for said land, by said Blair, to bear eight per cent. interest,. and added to the principal each year until paid· . All money necessary to stake off lots, grade streets, advertising, office furniture,)ixtures, and rent, and stationery, taxes, and such other expenses as may become necessary for the improvement and sale of said property, or may be mutually agreed upon from time to time by said Blair an(l Shaeffer, shall be furnished by said Blair. Said Shaeffer is to receive and deduct 5 per cent. commission upon gross sales of all lots sold at the. agreed price or over, made by said Blair and Shaeffer, and the remainder to be. deposited, in some bank in Kansas City that may be mutually agreed upon, to the credit of John I. Blair, until all the money he has paid or advanced, with interest as aforesaid, shall have been returned to him. At the end of each month said Shaeffer to report the amount to credit of said Blair, the same to be snbject to said Blair's draft on account of money advanced or paid for the property and otherwise as aforesaid. All contracts for the sales of the said lands or lots to be made in triplicate, and approved by said John I. Blair, or some one appointed by him, on the back of said contract. The word' approved' or ' rejected' to be written or signed by said John I. Blair, as aforesaid; one copy of said contract to be retained by said Shaeffer, and one by the purchaser. It shall be specified on the face of said contracts that said contracts shall not be valid unless approved as specified, and all contracts to be made payable to said John I. Blair. "When said Blair shall have been paid in cash for all the money advanced and fumished by him for the purchase of said land, and other moneys, and the interest thereon as specified, then the remainder of the property shall belong, sixty (60) per,cent. to said Blair, and forty (40) percent. to said Shaeffer; and then said Shaeffer shall not be required to deposit in the aforesaid bank, as aforesaid specified, to the credit of said Blair, more than sixty per cent. of the net proceeds of sales of said landS or lots. . "If it is at that time desirable to diville said lots or lands between said Blair and Shaeffer, said Blair to take sixty per cent., and said Blair to convey the title to forty pel' cent. of said property or lots by warranty deeds to said Shaeffer, 01'\ said Shaeffer to sell the lots or lands as .aforesaid, and divide the net proceeds of sales, sixty per cent. to said Blair, and forty per cent. to
BLAIR
'V.
SHAEFFER.
221
said Shaeffer. It is understood that said property or any portion thereof, to be staked out and prepared for sale within one year by said Shaeffer, or assigns, after the Kansas City Belt Line Railway shall have been completed to said property, unless otherwise postponed in writing by said Blair and Shaeffer. "In witness whereof the parties hereto have hereunto set their hands and seals on this fourth day of February, 1884, at Kansas City, Mo." In pursuance of this contract, and during the same month, defendant obtained title to the lands specified therein. Demand for a conveyance was made and refused. The first question arises on the construction of this contract. Complainant insists that he is the absolute owner of these lands, and that defendant by the contract took no interest in them, but was simply employed as an agent to sell, with a fixed commission, and a share in the net profits. as compensation for his services. Defendant claims that by it a partnership was formed, complainant putting in his money against defendant's time and services, that the title was to be conveyed to complainant simply as security for the moneys that had been advanced. This question is pivotal, for if defendant's construction is correct, complainant is certainly not entitled to the relief he asks. What constitutes a partnership? What tests can be applied which shall determine with certainty whether a given contract has given creation to a partnership? These questions have been often asked. It is enough to say that no tests have yet been found which determine with absolute and unerring certainty the question of partnership. There are no third parties in this case, and the question arises directly between the parties to the contract. It were useless to review the authorities from other states; it will be enough to consider what the supreme colirt of this state and the supreme court of the United States have said on the matter. A sharing in the profits is prima facie evidence of a partnership, but is by no means conclusive. In Donnell v. Harshe, 67 Mo. 172, the court uses this language: "It is essential to a partnership that there be a community of interest in the substance of it, and this community of interest must not be that of mere joint tenants or tenants in tommon." -And also quotes approvingly the opinion of Chief Justice SHEPLEY in Dwinel v. Stone, 30 Me. 384, as follows: "There must be such a community of interests as empowers each party to make contracts, incur liabilities, manage the whole business, and dispose of the whole property.: a right which, upon the dissolution of the partnership by death of one, passes to the survivor, and not to the representatives of the deceased." This decision was reaffirmed in Ashby v. Shaw, 82 Mo. 76, and also in McDonald v. Matney, Id. 358, in which case the court uses this language: "It is a question of intention on the part of the alleged partners, and is one which the triers of fact will have to determine upon all the circumstances proved; it would be difficult to state anyone fact or stipulation which wonld be decisive of the question, except a stipulation expressed that they were part-
/
.222 <tterg
·JIIEDERAL ,REPORTER.
inter sese,' thismiglitfbecoIitrolledby other stipulations. and -the:eonduct Of the parties in relation to the business. Each case must be de'tlermined upon ita {)wn peculiar facts...·;, i. fi' \ , 'v. Case, 99 '8.'1 1'9, is cited by 'defendaIitas in point, but is a very clear thatcasel:l.ud thi$. It is true in that, a8 in this, that one party was to furnish the money, and ,the other to obtain the title tothe property in his own name, and manage it for a fixed for their mutual benefit; but in tlia,t, the contractexpress]y provided' that the parties should share in both the gains and losses; and also named the relationship a partnership. and provided fora continuance thereof iIi case:of the death of one ofthe parties. The intention Of the parties was thus clearly expressed. Beyond that, the suptemecourt seems to have rested its decision, partly at least, upon the language of article2811,CivilCode La. 1870. The case of Slryrriour · v. Freer, 8 Wall. 202, is also cited, and I think that case very much'in point; but all the members of the supreme court united in declaring that I the contract there'presented did not create a partnership. That contract provided that one party should furnish money, and the .other invest it inland, the profits to be divided. It is true that the contract in terms expressed that the party receiving the money, and rendering services in the purchase of the Iand, was to receive one-half ofthe profits "in full for his services and expenses of every kind;" but it is also true that the part to be performed by each party, the relations actually created between them by the contracts, are the same in this case as in that. Here, the one party was' to furnish all the money, the other was to do all the work; so was it in that case. There, the party furnishing the mOlley was to take the title--so here; there, he was to be rehhbursed his money and interest-so here; there, the party doing the work was to receive a compensation outoi the net profitg.......so here; though the defendaut here, in addition, was to 'receive a fixed commission on all sales made. It is true that in that case the services were to be rendered · in buying land, here in selling; but that is immaterial. Looking at the substance of the contract,. that case would seem to be decisive of this, and to compel the conclusion that no partnership relation was created between the parties by this contract. Turning now to the contract, I notice these matters as supporting this conclusion: First. The title to the land is to be vested in complainant; -true, temporarily, for prudential reasons, it was to be taken in the ·name of defenda4t, but within four months, or sooner if complainant desired, it was to he vested in him alone, and not in any partnership. Second. ,Defendant was to receive 5 per cent. commission UPOll salesjlanguage apt to describe the compensation of an agent, and not a provision to' be expected as between partners. Third. The power of sale was not vested in defendant; none could be made by him without complainant's approval; while, on the other hand, no limitation is placed ·upon complainant's power of sale;-just such .an arrangement as might be expected between principal and agent, the only limitation in such cases deemed necessary being u.pon the acts and authority of the agent.
n.
.BLAm V. SHAEFFER.
223
Surely this.doesnot disclose suoh a complUnity ofinteI:est as authorizes each party to make contracts, incur liabilities, manage the whole business, and dispose of the whole property.' Fourth,·. It is provided in the contract that complainant shall be. reimbursed, his money and interest, "then the remainder of the property shall belong, 60% to said Blair, and4Q%to said Shaeffer." , This implies, not that the property belong{fd' theretofore equally to each, but that it belonged to complainant alone, anq: was l\ provisiop. foJ,' the division of the net profits. It matters not that the profits ,remained in land, for the interest then to be vested in defendant in the lands was an interest in th<:om simply as profits. Fifth. It is provided that the property shall be "staked out and prepared for sale within by said Shaeffer, or assignt;l." A partnership contemplates nOassignrnent-by one party, and the use of that word tends to support the conclusion that no partnel'shipwas intended. These f!pecial matters 811unite in disclosing the intent ofthe parties; an intent not to create a partnership, but the relation of principal and agent. It is, urged. by counsel for defendant, that in one place if:! found this expression:" It is further agreed for the. mutual interest of said Blair and ,Shaeffer;" but this is perfectly consistent with the non.exif!tence, of a partnership, .for Shaeffer was interested,by reason of his share in the.-profits,as ,well as Blair, in- anything which. increased the value of the land or -tended to facilitate sales. Of course"the' written contract expressed the obligation and relations of these parties, and it is unnecestoexa.tiline either the coral qr written communiCations between them their only vlIlue would be to throw light on any question prior intent of language, used in the contract; and yet, if we of the examine those prior communications, the general import of them seems to me to be this: that Shaeffer was seeking to induce the complainant to buy land, and oQtain the:agen<:lY for the sale, coupled with an option to purchase. Myconclusiorh then, is that no partnership was formed by this contract, andjhat the rights of the parties are not to be determined by the laws of partnership. The contract provides in terms that "within four mont1;ls after said Shaeffer have obtained the title to said lands, or soonelif desired by said Shaeffer to make a warranty deed! to said Blair for said lands." Shaeffer has failed to do this on demand t : and upon the specific performance of this covenant. It is objected defendant's part that perfect title has not been ob· tained; that there still' remains an unremoved cloud; and that this covenant should ,be read "within four months, or sooner, after the acquisition of perfecqitle." I do not, soundeJ'stand the covenant. The title referred to therein is the title previously specified in the contract. That title wasoptained qefore the expiration of the month in which the con;. trae;twas.signed. Shaeffer, in his letters written during that month, says: "Have n()wperfect title;" and, again: III will record Wednesday morning.e}evendeeds, and the title will be perfect." Blair is content to talrethe title which Shaeffer has, and it does not in Shaeffer's mouth to now allege a defect. But it)s further objecteeJthat equity will never contract, and enforce that, when nothsingle out a single
224
1'ng substantial is accomplished thereby, and that Blair's interests are fully protected by the recording of this contract. This bclngs me now to consider what tights Shaeffer had under this contraot. Evidently he had the right of an agent to sell, with a share ofthe profits as oompenslition; and this right amounted to an interest in the land. Such was the conolusion of a majority of the supreme oourt in the case of Seymour v. Fref/1', supra. Defendant now insists that oomplainant must be restricted to the allegations in his hill, which are that, by said contract, "said Shaeffer was to convey the said lands so purchased to oomplainant, and' was in no event to have any intf/1'est in said lands, but was simply to hold them in trust for the complainant until he desired the legal title." If that were all there is in the bill, there might be force in the objeotion ·of the defendant; at least an amendment ofthe bill might be necessary; but the bill goes on further, and alleges gross misconduot on the part of Shaeffer in the purchase of these lands, and that brings up these questions: What misconduot, if any, is shown on the part of Shaeffer? And what misoonduct on the part of an agent will forfeit his right to oommissions and compensations? Answering the last question first, I quote the rule as laid down in Story, Ag. § 311: "In the next place, the agent is entitled to his commissions only upon a due and faithful performance of all the duties of his agency in regard to his principal. '" '" ... If, therefore, the agent does not perform his appropriate duties, or.f he is guilty of gross negligenoe, or gross misconduot, or gross unskillfulness in the ,business of his agency,he will not only become liable to his prinoipal for any damages which;he may sustain thereby, but he will also forfeit all bis commissions. Slight negligence, or slight omissions of duty, will not, indeed, ordinarily, be visited with such serious consequenoes, although, if any loss has occurred thereby to the principal, it will be followed by a proportionate diminution of the commissions. " See, also, Sumnf/1' v. Reichenikf/1', 9 Kan. 322;' Portf/1' V. Silvf/1's, 35 Ind. 296. See, also, the case of ])en'l)f/1' v. Roane, 99 U. S. 355, as to the effect of misconduot on the part of a partner upon his right to share in compensation. Passing now to the first question, I have before me an enormous volume of testimony, much of it wholly irrelevant, or at most tending to show nothing m'bre than the feeling whioh exists between the parties, and the oiroumstanoes whioh led to their estrangement. Coming now to the matters which are pertinent, it appears that the contraot contemplated four transactions:' First, the purchase of the Cardenas tract; second, the purchase of the tracts belonging to the West minors; third, the purchase of the John S. West tractj and, fourth, the obtaining of certain releases from the Anthony heirs. All these transactions were carried through by defendant, exoept obtaining the release from one of the Anthony heirs, and. the claim of complainant is that defendant in each of these transaotions deliberately defrauded him out of a large amount of money. He claims, further, that defendant, without his knowledge and consent, sold a portion of the land to the Missouri Pacific Railway Company, receiving $1,310 therefor; that he also received from the Belt Railway Company $4,200; both of which sums he has appropriated to him-
BLAm. V. SHAEFFER.
225
self, and failed to deposit or pay over as required by the contract. Also that he conveyed'to one Frederick Lamb a small portion of the land, taking back a trust deed therefor for his own use and b.enefit, to the provisions of the contract. Also that he conveyed the entire property to one Ernesto Dalte. r shall oonsider these matters in the reverse order. beginning at the. last, and shall generally without noticing the testimony in detail, simply state my conclusions. First. So far as· the Dalte matter is concerned, it RmOtlnts to nothing. The conveyance was made after ,this contract had been placed of record, and does not purport to be anything more than a conveyance of defendant's interest, subject to that contract. The reasons given for the conveyance seem to be satisfactory. . Seccmd. It appears that, shortly after receiving the title, defendant made the conveyance of a small portion of land to Lamb, taking back a troust deed for his own benefit. Afterwards Lamb reconveyed the tract to him,' and no actual injury has resulted to complainant. It is insisted by defendant that· no real sale was made; that the whole thing. was a. shlJ,m, for the purpose of giving an apparently high to the .land to be used in litigation over some oondemnation proceedings instituted by the Belt Railway. There is nothing to show that this claim: is not true, and this matter may therefore be put one side. ' With regard to tbemoneys received from the Missouri ·Pacific Railway and the Belt Railway, unquestionably those moneys were received by defendant, and have never been paid over to complaiJi/1.nt. Unquestionably, too, complainant was aware of the instituted by the Belt Railway. Whether he knew of the receipt of the money from the Belt Railway, or the sale. pf the. Missouri Pacific and the receipt of the money therefor by defendant, are matters in which the testimony of the complainant and the defendant are directly opposed, and there is no outside testimony to determine between them. I pass these matters, therefore, with no further comment. I COme now to the consideration of t)1e four matters mentioned in the contract. It appears from the contract that it was deemed for the interest of the parti.es that releases should be obtained from the Anthony heirs of some supposed claims held by them against the land in question. On the same day,. or at least during the same month, a further agreement was signed by the parties by which defendant was authorized to obtain a release by quitclaim from said heirs for the sum of $8,559, the money therefor to be advanced by complainant as fer the other purchases. At the close of such agreement will be found these words: "Of course, you will purchase said claims at the lowest price, and at any less sum that you can purchase them for, the balance to be returned to me." This was signed by both parties. As a matter of fact, defendant obtained these quitclaims from all the heirs, save one for $2,400.30. These quitclaims were represented by three deeds; in one of which the consideration named was $3,380, in another $1,690, and in the third $3,378, aggregating$8,448. On the twelfth of February he drew for $8,450 to v:33F.no.4-15
226'
F£l)'Jl:1\AL REPORTER.
pay 'for these quitclaiUls. From his letters during that month the only fair inference is that he hadpurcha:sed releases from all the heirs, though now he testifies that there still remains one whose interest has not been obtained. The considerations named in these deeds correspond within two dollars with the amount for which he drew. and it is difficult to believe ihathe did not intend to represent to complainant that the sum which he had drawn was the sum he had paid for the releases already obtained. I have little doubt that such was the fact, and that he in- ; tended td charge, and did' charge and collect, from the complainant, the sum of $8,500, as the purchase price of property for which he paid only , $2,400. ' Again, it is provided in the contract that defendant should purchase from John S. West, if possible, his tract of 69 acres, at a price not tt> exceed $400 per acre; amounting to $27 ,600. He did, in fact, purchase it for $20,000, paying' $5,000, and giving a mortgage for the balance. He drew,for$14,60(), to pavJt>hn S. West; or $9,600 above the cash paid. '1'he unpaa.d'balance"of $15,000 complainant has since hadtt> pay. Defendant'sexplanatit>n ,18this: That he had at on6 time a contract for the pUr<lhllSe' ofthisla.nd Itt $20,OOO;fuiling to take the land at the time stipulated, Weatcommenced a suit in attachment, attaching defendant's'interest in the Goodrich tract. to that suit a bond for $7,500 was given; this suit was dismissed by West. Thereafter defendantcommebced1a suit on the attachment bond, and subsequently a second suit Westfor$15,OOO, for breach ofhia;contract to convey. ' A part ofthe consilieration of the purchase of this contract was· the dismissal of these s11its; With this explanation it would still leave $2,000 more dmwn fOl'thanwas paid,,. for.;$20,OOO was the cash consideration, of:which'$5iOOO\taspaid. Nor can it for a moment 'be supposed that the parties in this C0ntract contemplated other than cash considerations, or that ;the complainant ever authorized defendant to put his OWllvalU8' on his speculative law suits, and;chatge that value to complainant 8S apart of the purchase price of the land; Again, the 'contmct recited'that.defendant held a contract with Marion West/the guardian of Frank:West; Thomas West, and Joseph C.West, minors, for :the 'purchase of thiooseparate tracts belonging to said mi. liors, for the sum: of $44,559 j and authorized him to complete the purchase thereof. He did complete the purchase, but in fact paid $41,448, notwithstanding he drElw for: and received the sum of$44,559. It is true, he testifies ,that he paid $4,036.37 above the sum of $41,448, but the consideration!J'Iiamed itt the deeds amountdnly to the sum of$41,448, and:Mrs; 'West testifies th8.t:that'is all that she received. Again, the contract recites that ;he has a contract withP. Carden:as, ofNew York city, rorthe purcihaseof36 47-100 acres for the sum of$21',-. 882, and authorizes him to complete that purchase. He did so,paid the sum ·of $21,882, and'obtained a deed. The facts with resp.ect to that are these: In 1882 he had purchased this land for $10,941, paying $3,000 down, and givingsElC'Urity on the land for the balance. He immediately conveyed, this land 00 P.Cardenas, and had ex-
V. SHAEFFER.
227
ecuted'a contrnctfor recotlveyance at'twice the former-price, to-wit, $21,882. Thisp. Cardenas was:awoman in New York who lived with him as his-mistress, ,bore hill}' aehild in 1884; and died shortly thereafter. He claims that after she hli.d lived with,him a.while as his mistress, their affection ;for each other became so strong that, while no ceremony of marriage was ever performed, he recognized and treated her as his wife; that in the he gave her $16,000; and that he had a portitm of this money with him, out of which he made the first payment. A check.given by complainant for the purchase price was indorsedby her,and deposited in a bank in New York city to her credit, but the proceeds Were soon drawn out, part of them; passing directly, as is of'defendant; and when obvious from the bank-books, to the she died in the fall of 1884,according to hisowtl statement to two or can fairly be three witnesses, she left no property., But one drawn,a:nd that:isthatthe property was all the while his, and her name was used simply.to enable him to double the price to any purchaser. These ate thesWient facts as they appear from the testimony. ,By his own admission he has $21,336.70 of complainant's money. As against this he says that he has paid out for expenses $7,519, and that he has had no compensation :for his sellvices, which he claims were very valuable. He says that he 'advised the complainant'of these matters, a statement which complainant denies. So far as the testimony of these parties contradicts each other, and is unaffected and unsupported by outside testimony, the only fair way is to discard both'; and yet, even in their probabilities based contradictions, regard must be had to the upon the sitllationsof the parties. It must beborne in mind that this 1884; that during that month all contract was made in purchases were made, all this money drawn from complainant. This controversy did not arise until the spring of 1885. The letters that were written by defendant contained no statement or suggestion, of this overplus of money that was drawn, but on their face carried the idea that only that, was drawn that was actually paid out. The contractprovided specific compensation, both in manner and amount, for the services of the defendant. Complainant responded, apparently with no hesitation or doubt, to all drafts made upon him, and if anything further in the way of expenses had been incurred, and he had been called upon to pay them with a statement of the items and amounts, there is no reason to doubt that he would have prorilptly responded. Reappears to have then had every confidence in defendant. Complainant's recompense for his money, and defendant's compensation for his services, were specifically prescribed in the contract,and neither had a right to claiUl more or other. Ifany daime;x:isred on behalf of defendant other thaIithose provided for, it was not for him to draw money on the pretext of payment for lands, and hold it as compensation therefor. Jf the settlement of, his two suits 'against John S. West was worth anything, it was not for hi,m to value them at $7,600, and draw for that as a part of the apparent price of the land. But oM conclusioncim be drawnfrolll this.testimonYi that is, that in each of these four transactions he drew frombis principal, as supposed
a
228
pu.rchase money, thousands of dollars more than he actually paid out. Could any clearer case of gross misconduct be disclosed? Can it be said that after such misconduct in purchasing. complainant is still bound to accord him the right to sell and give to him the commissions and profits of such sales? He who cannot.be.trusted to buy, cannot be trusted to sell; if ,he defrauds in the purchase, can it be otherwise than that he will defraud in the sale? .He who yields not common honesty in the one direction, forfeits all rights in the' other. It is said by counsel, and. the '. testimony seems to warrant. the assertion, that this land has become very valuable, and. that the profits.on its sale would be simply.enormous,and the question is asked, ought defendant to be deprived of his share of these profits? It may be hard punishment, and yet the law in every page, and sentence of its sacr.edvolumes iterates and reiterates the ancient truth that honesty is the best policy, and affirms that the agent who deliberately defrauds his principal, justly forfeits all right to commissions and compensations, as welias loses his time and labor. The charges of the bill are proved; the defendant as the agent, an agent with an interest, deliberately defrauded his principal, the complainant, and therefore has forfeited all the interest and rights given to him by this contract; and the complainantis:entitled to a decree as prayed for. In the law case which is brought to recover the money fraudulently drawn from complainant, 1 state the ,account thus: $92,882 70 Amount received,Amount paid out for Cardenas' tract, - $10,941 00 41,448 00 For theWestminors'tracts. For the John S. West tract, 5,000 00 For the Anthony heirs' releases, 2,400 30 For expenses shown in letter'Febnlary 12th, and allowed, 500 00 60,289 80 Balance,-; . - $32,593 40 -For which Judgment will go. . , The deClarations of law requested by complainant are given·.
KENT'
et al.
tl. CONGDON
(Oi'fcuit OOU'ft, S. D. lowa, O. D.' PAYMENT-To AGENT-AUTHORITY. In ll. suit to foreclose a Inortgage'the
December 12,1887.)
defense was payment. The evidence showed that the loan had been negotiated through a broker in Des Moines, Iowa, who ,had the general oversight of the loans of the plaintiff. collecting the interest and prihcipal of all loan's as they fell due; that the plaintiff had expected the broker to collect andreInit the interest on the mortgage in suit, to urge its payment when due. and to receive themonev, and forward it to plaintiff; that the defendant had never had any correspondence with plaintiff In regard to the loan; that the bond accompanying the mortgage was made payable at Westfield, New York; and that the defendant had paid to the broker,
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